Investment Rating - The investment rating for the pharmaceutical and biotechnology industry is "Positive" [2]. Core Views - The report highlights that the innovative drug market is expected to maintain momentum throughout the year, driven by significant business development (BD) activities [3][4]. - The report emphasizes the importance of new technologies and unmet clinical needs in the innovative drug sector, suggesting that Chinese innovative drug companies are gaining global recognition [3][4]. Summary by Sections 1. Industry Overview - The pharmaceutical and biotechnology sector achieved a weekly return of 2.95%, outperforming the CSI 300 index by 4.70%, ranking first among 31 primary sub-industry indices [3][12]. - The chemical pharmaceutical sub-sector had the highest weekly return of 5.01%, while the medical device sub-sector ranked sixth with a return of -0.07% [3][12]. 2. Market Performance and Valuation - The pharmaceutical and biotechnology industry index increased by 11.90% over the past month, ranking second among 31 primary sub-industry indices [14][23]. - The current price-to-earnings (PE) ratio for the pharmaceutical and biotechnology industry is 30.90, which is at a historically low level compared to the average PE of 30.89 over the past five years [17][19]. 3. Key Developments - Significant BD projects include: 1. Hengrui Medicine authorized overseas rights for its innovative drug HRS-9821 to GSK, with an upfront payment of $500 million and potential milestone payments totaling approximately $12 billion [3][12]. 2. CSPC Pharmaceutical authorized overseas rights for its GLP-1 receptor agonist SYH2086 to Madrigal, with a total package amount of $2.075 billion [3][12]. 3. Lepu Biopharma authorized overseas rights for two T cell connector projects to Excalipoint, with an upfront payment of $10 million and potential milestone payments of $847.5 million [3][12]. 4. Focus Areas - The report suggests focusing on the upstream supply chain of innovative drugs and high-end medical devices, highlighting key companies in these sectors [3][4]. - In the innovative drug sector, attention is drawn to areas such as dual-target and multi-target therapies, small nucleic acids, and PD-1/L1 based constructs [3][4]. 5. Policy Dynamics - The report notes the implementation of a childcare subsidy policy effective from January 1, 2025, which aims to support families with children under three years old, potentially impacting the healthcare sector positively [3][12].